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A Venture Into Imperialism

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A Venture Into Imperialism Acknowledgments I would like to thank my thesis supervisor, Professor Gilles Scott-Smith of the North American Studies Master program at Leiden University for his patience and advice. Though this thesis is my own work, Professor Scott-Smith always steered my in the right direction when it was necessary, and I am very grateful for his input. I would also like to thank my sister Lola De Coster for her very creative work which I used as a cover photo for this thesis. A VENTURE INTO IMPERIALISM The United States Congress and the First Oil Deals with Saudi Arabia (1943-1948) Master’s Thesis North American Studies University of Leiden Archibald De Coster S2096447 Date: December 21, 2017 Supervisor: Dr. G. Scott-Smith Second reader: Dr. W.M. Schmidli "There is nothing that men and nations will not do to gain control of it. They have been known to bribe kings and potentates, to foment revolutions, to overthrow governments. Purely individual rights and interests have frequently been of very little moment in the struggle for petroleum." Senator O'Mahoney. De Coster 1 Table of Contents Introduction ................................................................................................................................ 3 The First Oil Deals with Saudi Arabia ..................................................................................... 10 Birth of a geopolitical oil labyrinth ...................................................................................... 10 The Coming of the Americans .............................................................................................. 11 The Challenges of the 1940s ................................................................................................ 21 The Final Years of World War II & the Conquest of Saudi Oil .............................................. 28 Congress & the Oil Shortage ................................................................................................ 28 The Petroleum Reserve Corporation and "Solidification".................................................... 31 Government-backed Monopolies ......................................................................................... 33 Congressional Opposition to ‘American Imperialism’ in the Middle-East .......................... 37 Congress and the Post-War Petroleum Order .......................................................................... 46 The Anglo-American Oil Agreement ................................................................................... 46 The Truman Doctrine & the Aramco Merger ....................................................................... 50 The European Recovery Program (ERP) .............................................................................. 58 Conclusion ................................................................................................................................ 65 Annexes .................................................................................................................................... 70 A. Map of the Red Line Agreement (Line drawn by Gulbenkian). ...................................... 70 B. The Tapline ...................................................................................................................... 71 Sources & Bibliography ........................................................................................................... 72 De Coster 2 Sources .................................................................................................................................. 72 Bibliography ......................................................................................................................... 79 De Coster 3 Introduction "When our Chief Executive exchanges correspondence with the executives of other sovereign states on matters of public business which are not concerned with our national security such letters should not be made the property of private files."1 With these words, Republican representative Mundt expressed his concern over the increasing amount of personal letters that were exchanged between American President Franklin D. Roosevelt and 'Abd al-' Aziz, king of Saudi Arabia.2 The letters were only published after Roosevelt's death, on the 12th of April 1945. 'Abd al-' Aziz and Roosevelt's written exchanges increased after the two heads of state met during the month of February 1945 on board the USS Quincy in the Suez Canal after Roosevelt came back from the Yalta conference. Congress regretted that the content of those letters was being kept secret from Capitol Hill and the American public.3 The same thing can be said about the meeting the two men held on the USS Quincy. One thing is known for certain; the issue of Palestine and a Jewish homeland was discussed. But there is one topic of which the official record of is surprisingly silent about, one that could not have been left aside, a subject of which even the account of William E. Eddy, who organised and presided the meeting between the two leaders, is silent about; the oil of Saudi-Arabia.4 Oil was first discovered in Saudi Arabia in March 1938 by the California-Arabian Standard Oil Company (CASOC), a subsidiary of two giants of the American oil industry: Standard Oil of California (Socal) and Texaco. But The United States and Saudi Arabia would 1 Rep. Mundt (SD), "King ibn-Saud's Letter to President Roosevelt and the President's Reply to the King", Congressional Record 91, May 22, 1945, A4559. 2 ‘MUNDT, Karl Earl | US House of Representatives: History, Art & Archives’, accessed 27 August 2018, http://history.house.gov/People/Detail/18675. 3 Rep. Mundt (SD) King ibn-Saud's Letter to President Roosevelt and the President's Reply to the King", Congressional Record 91. 4 ‘Eddy, William A. (09 March 1896–03 May 1962) | American National Biography’, accessed 27 August 2018, http://www.anb.org/view/10.1093/anb/9780198606697.001.0001/anb-9780198606697-e-0700854. De Coster 4 only enter into official diplomatic relations in February 1940.5 In April 1941, James A. Moffet, the Chairman of the board of directors of the Bahrein Petroleum Company (Bapco), another subsidiary created by Socal, and a man who also represented CASOC issued a letter to President Roosevelt.6 CASOC was out of money; the company had run out of means to finance the kingdom through royalties to 'Abd al-' Aziz, in addition, the commercial uncertainties that came with the Second World War was a factor that private companies also needed to take into account.7 Government support was needed, so CASOC and James A. Moffet turned to Washington. The result of these correspondences and their consequences mark the beginning of the policy of "solidification", undeviating involvement by the United States government in the territory of Saudi Arabia.8 With Saudi oil being the final objective, some participants such as the private oil companies had already made steps to this end before everyone else; the State Department only took position after CASOC reached out to the executive branch of government. Others, such as Secretary of the Interior, Harold L. Ickes, devised a strategy on their own. One player however was not consulted, as expressed by Representative Mundt; Congress. Senators and representatives debated actively on America's growing relation with Saudi Arabia in the 1940s, and Capitol Hill also discussed the endeavours the Roosevelt and Truman administration were engaged in with the private oil companies in the kingdom. The war and its conclusion had consequences which ramified in the United States and the Middle East. According to Aaron David Miller, a State Department historian and analyst on Middle- Eastern issues, the interest from the United States government in Saudi oil during the 1940s 5 Sen. Wiley (WI) "Chronology of United States Foreign Policy, 1935-41", Congressional Record 87, September 29, 1941, 1733. 6 Marius S. Vassiliou, Historical Dictionary of the Petroleum Industry (Scarecrow Press, 2009), 71. 7 Foreign Relations of the United States, Diplomatic Papers, Volume III, The British Commonwealth; The Near East and Africa, 1941, eds. Francis C. Prescott and Kieran J. Carroll, (Washington: Government Printing Office, 1959), Document 645. 8 Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power (Simon and Schuster, 2011), 379. De Coster 5 happened in three different phases.9 The first phase ends in 1943 and can be described as CASOC's quest to obtain government aid for Saudi-Arabia and when the United States tried to find a place for itself amidst the complex division of Middle-Eastern oil. During this period, Great-Britain's role was paramount in influencing America's future policies towards Saudi Arabia. The second phase can best be summarized as unfavourable and doomed United States' government projects, such as the Petroleum Reserve Corporation, this phase closes with the end of World War II. The final phase touches on the immediate post-war years during which the United States protected its valuable resources in Saudi Arabia and elsewhere against the potential threats that came with the emergence of the Cold War.10 This thesis focuses on Congress' position during these three phases, particularly from 1943 onwards, when Capitol Hill's perspective on the oil of Saudi Arabia was beginning to take shape. The studied period ends in 1948 with the Aramco merger when the matter was left in private hands with diplomatic support from Washington, when a series of economic and political interests converged. By examining
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